MONTPELIER — When it comes to health care reform, Gov. Peter Shumlin and Republican challenger Randy Brock tout the same goal: deliver better insurance to more Vermonters for less money.

However, they could not be offering more divergent paths to get there.

On Thursday evening, in an email to thousands of supporters across the state, Brock finally unveiled his free-market alternative to the single-payer system favored by the Democratic incumbent.

The six-page document is purposefully vague, according to Brock, who says he’ll fine-tune his reform strategy once he has the resources of the executive branch at his disposal. In broad terms, he wants to apply the same principles to health care that he credits for affordability elsewhere in the consumer marketplace.

“Every time I go to Costco or Best Buy, I look at the price of large-screen TVs, and every week they’re lower,” Brock says. “That’s what competition and choice do — they make producers and suppliers of products compete for your business.”

Even before he was inaugurated in January of 2010, Shumlin had already begun laying the groundwork for a first-in-the-nation single-payer system that uses public financing to ensure universal coverage. As Shumlin so often says, his approach views health care “as a right, and not a privilege.”

In much the same way government has assumed responsibility for public education, law enforcement and the construction of transportation infrastructure, Shumlin’s plan authorizes state bureaucracies to set system-wide budgets for health care, and then distribute those costs across the tax-paying population.

Brock calls it a wrongheaded approach that will “lead to rationing through global budgets” and “discourage physicians and dentists from moving to Vermont.” Of the 47,000 Vermonters without insurance, Brock says he’s as committed as Shumlin to ensuring they get coverage.

“But instead of increasing government’s role in our health care decisions, what we want to do is reduce the number of people who are currently receiving government-sponsored health care by reducing the cost of that health care, to make it affordable for those who are priced out of the market,” Brock says.

Brock eyes Maine legislation

While his plan is short on specifics, Brock has outlined some concrete policies, including some instituted in a controversial law passed last year in Maine. In the ideological battle over that legislation, the conservative allies of Republican Gov. Paul Lepage won out over more liberal lawmakers and advocacy groups. And Brock — who hosted the Maine governor at a fundraiser earlier this summer — would use some of cornerstones of that legislation in his recipe for overhaul here.

Among them are revisions to what is known as “community rating,” a mandate that forces insurance companies to fold very high-risk and very low-risk policyholders into the same risk pool.

Community rating aims to level out price points, meaning younger, healthier people pay higher premiums in order to make things more affordable for their older, higher-risk counterparts.

Under the federal Affordable Care Act, private insurers can charge a high-risk customer up to triple the amount a low-risk consumer would pay for the same policy. But a Vermont law, first instituted under Republican Gov. Richard Snelling in the early 1990s, requires strict 1-to-1 pricing ratios, meaning an 80-year-old man pays the same as his 20-year-old grandson for an equivalent policy, despite the fact he’s more likely to incur more medical costs.

Brock says Vermont’s rule “requires healthier, young families with children and mortgages to subsidize the premiums of their older, sicker, but sometimes much wealthier parents.”

By permitting age-based price variance, to the maximum allowable under federal law, Brock says, many of the families that now rely on programs like Catamount, VHAP and Dr. Dynasaur will suddenly be able to afford policies sold on the open market.

As for the resulting spike in premiums for older Vermonters, Brock says he’d insulate them from harm through “reinsurance,” a mechanism that subsidizes the higher costs by assessing a small surcharge on all insurance policies.

Age-based premiums

Prior to the passage of what is known as “PL90,” Maine allowed age-based price variances of no greater than 1.5-to-1. Under the new statutory regime, insurers in the small-group market — usually businesses with anywhere between one and 50 employees — can now use a 2-to-1 ratio. The ratio will ratchet up to 3-to-1 over a period of years.

Joel Allumbaugh, director of the Center for Health Reform Initiatives at the Maine Heritage Policy Center, a group that championed PL90, said community rating, instituted in Maine in 1993, never achieved its intended effect.

“There was an expectation that rates for younger folks would come up some and rates for older folks would come down some and we’d have this happy medium,” Allumbaugh says. “What happened in reality was rates went up for everybody.”

In the short time since more lenient community rating standards went into effect, Allumbaugh says, Maine policyholders are already beginning to enjoy the benefits.

“We can compare two quarter-over-quarter comparisons now, from pre-PL90 to post-PL90, and we’re already starting to see a shift,” Allumbaugh says.

Citing government data, Allumbaugh says that prior to the law taking effect, 97 percent of small groups saw increases in their annual policy premiums, “and only 3 percent saw decreases.”

“And now we’ve increased the number of groups seeing decreases to 10 percent,” Allumbaugh says. “And that’s a pretty significant swing, especially considering it was only the first adjustment (to the community rating ratio).”

Mike Tipping, communications director at the Maine People’s Alliance, an organization that fought PL90, says Allumbaugh’s statistics don’t tell the whole story. While prices might have declined for some Mainers, others, according to Tipping, have been priced out of the market.

PL90 established a reinsurance pool — much like the one proposed by Brock — funded by a $4-per-month assessment on the premiums of every policyholder. But the approximately $22 million raised by the surcharge, Tipping says, hasn’t come close to offsetting the impact on small-business owners who find themselves at the high end of private insurers’ risk-assessment formulas.

“(Insurers) can discriminate now on age, geography, and type of business, and we’re seeing these huge increases for people all over the state,” Tipping says.

Tipping is in the process of collecting horror stories from business owners, including an advertising firm in Bath that saw premiums jump by 67 percent, and a pizza parlor in Bar Harbor that is trying to absorb a 97 percent increase.

“These are the kinds of things we’re hearing from everyone across the state,” Tipping says. “We’re seeing jobs lost and businesses go under. It’s really sad.”

Proposal ‘will evolve’

Brock calls his health care proposal a “living document.”

“And it will evolve,” he says.

If the 3-to-1 community-rating ratio allowable under the ACA will inflict undue harm, Brock says, then Vermont can dial it back. Brock says one key benefit of his plan, which also borrows from concepts being implemented in places like Indiana and Florida, is that Vermont can see whether the provisions it contains are working elsewhere.

“One of the advantages of using an approach like mine, that is incremental, that deals with individual, discreet cost drivers, and that mirrors what somebody has done somewhere else, is you can see: does it work or does it not work? Does this need to be tweaked or adjusted?” Brock says.

Shumlin’s single-payer plan, by contrast, constitutes an all-or-nothing wager from which Vermont cannot retreat, according to Brock.

Shumlin’s campaign manager, Alex MacLean, says Brock’s proposal is a regressive plan that would “raise the cost of health care by up to 300 percent, increase the number of uninsured and give yet more profits to insurance companies.”

“Twenty-one years ago, Republicans and Democrats attempted to bring fairness to a broken system in which insurance companies denied coverage to the sick and offered unaffordable plans to the elderly and those with pre-existing conditions in order to increase their own profits,” MacLean says. “This is the system that Randy Brock has proposed Vermont return to.”

Brock says it’s “disingenuous” for Shumlin to criticize his plan when he has yet to tell Vermonters how he’ll pay for his own.